Tag: business
How to Finance Your Small Business Start Up
It all starts with a great idea, an idea that has probably been in your mind for a long time. You have the product sorted out, how you are going to deliver your service, where you are going to set up your office and how you are going to market your new business. But the stumbling block always seems to be the finance to get you going.
Finding the finance to get a small business off the ground is a major issue for any potential small business. Some new businesses lend themselves to very little start up capital because the main selling point is the ownerís skills and knowledge, for example consultants, web designers, PR specialists. Businesses which require stock holding, plant and equipment and other investment, face the real challenge of getting their start up finance together.
So what sources can you tap into to ensure your business gets off to a solid start?
<b>Your Savings</b>
The first port of call! If you have been in employment for some time then before going it alone you should hopefully have some spare cash behind you. Whether this be in the form of cash in a savings account or shares and unit trusts, this is a good start to your fund raising exercise.
You can be more focused in saving cash if you have had the goal of setting up your own business for awhile. Knowing you need to save to get your business off the ground will make sure you donít spend your future nest egg on unnecessary items. Whilst a new Plasma TV or the latest DVD Recorder may seem to be an essential purchase, knowing that you have a business to set up in the future will be sufficient a deterrent to keep the cheque book firmly locked away!
<b>Keep Your Job</b>
Some business owners are lucky enough that during the early days of the business they can keep the day job while working on the business during the evenings and weekends. This has two benefits. Firstly, they are still earning thereby allowing more time to build up a cash reserve. Secondly, itís an opportunity to test out the business to make sure there is a market.
Make sure that you can realistically keep both balls in the air at the same time otherwise you will end up doing justice to neither your job or your new business. The support of your family is also essential if you are to follow this strategy. They have to accept that what used to be ëfamily timeí may have to take a back seat until you decide to concentrate on the business full time.
<b>Family and Friends</b>
These can be a useful source of finance for any start up. If you have harboured ambitions to run your business for some time, then many of your family and friends are already likely to know about your idea. You should therefore have an indication who is for it and who is against it.
If you havenít shared your secret desire then itís time to be slightly devious! If you are in the early planning stages start drip feeding your ideas to key people whom you think are likely to support you. Tell them your ideas, share your ambitions and goals and on a regular basis update them with your progress. The plan is to get them sold on you and your future business at an early stage.
Once you get to the point where you are ready to start asking for contributions hold an Investor Evening. Prepare a presentation outlining your plans, the business, the market etc. Show the potential investors what their return will be in recognition for supporting you.
Invite as many people as you can and promise an interesting and fun evening, Be bold at the very start; tell them exactly why they are there, so there are no misunderstandings. After you have done your presentation gather all the names of the people who may want more information or even a one-to-one with you.
Whilst this group are people who know you and so are more likely to trust you, donít forget that you are developing a very different relationship which can quickly turn sour. Be prepared for rocky times!
<b>Bank Line of Credit or Loan</b>
Now youíre getting into the serious stuff! Getting support from a Bank for a new business is tough, as many entrepreneurs will testify. One sneaky way is to apply for an unsecured loan while you are still in employment. If you have planned things right you will know when you are starting up, so a few months before you pack your job in, apply for a loan based on your salary. However, make sure that you can comfortably meet the repayments. There is no grace period; you will be expected to pay back immediately, so your business will have to start earning very quickly.
The alternative is a business line of credit facility. There is no fixed repayment date, although they will be for periods from 6 to 12 months, and all you have to do is ensure that you keep within the overdraft limit. You will have to write a business plan to present to the Bank which outlines your idea and the business.
<b>Mortgage or Equity Release</b>
With the way house prices have been increasing over the last few years, the vast majority of people now have substantial equity in their homes. The cheaper alternative to a Bank overdraft or loan is a mortgage. The interest rate is lower and, as the repayments are spread over a longer period, the monthly repayment is less (although you will end up paying more interest in the long run).
The disadvantage of raising cash this way is that your home is potentially at risk. If meeting the monthly repayments is dependent on what the business can generate then a slow start could cause cash problems. So be very sure you can meet the repayments even during a lean period.
<b>Credit Cards</b>
If you havenít got any savings, canít get support from family or friends, or a Bank loan or mortgage, then there are your credit cards! However, whilst itís easy to draw down on your card, be wary! Credit cards are the most expensive form of debt.
They are ideal because all you may have to do is pay the minimum amount but card debt, as most people have found out, can be a long term burden. But, if you need a cash lump sum to kick start the business and you know you can pay it off within a few months, then itís an alternative source of finance worth considering, if somewhat unorthodox!
<b>Business Grants</b>
Business grants are available for specific industries, sectors and reasons. Grant providers will usually only give a portion of your requirement, so they cannot be used to totally finance a start up. However, they can be useful in filling a funding gap.
<b>Business Angels</b>
A popular way to fund a business are Business Angels. These are people, usually retired or successful business people in their own right, who are looking for opportunities to invest in new businesses.
In exchange for an investment they will typically look for a shareholding in the business and some hands-on involvement. They will have a vast business experience and so are useful people to have on board. However, you will have to accept an element of loss of control but that needs to be balanced against your desire for funding.
Getting finance for your new business can be a challenge but there are a number of avenues to explore and so with dedication and focus you could soon be on your way to launching your own small business.
More info’s and free registrations (restricted to pros), please join our live seminar
Your Small Business Web Site
A web site is a crucial ingredient of your marketing strategy because it can widen your target market to include anyone who has access to a computer and the internet. Almost 60% of Canadians had access to the internet at home in 2003, and around 8 million had regular access to the internet from somewhere, either at home, at work or at school.
And thatís just in Canada. Ecommerce sales from Canada were $7.2 billion, and we only captured 4% of the global ecommerce market! So, how can you reach some of those internet surfers, and how can you capture some of that $7.2 billion spent in ecommerce?
First, you build it
The first step is designing your website. If your company already has business cards and letterhead, itís best to design your website around them. A matching corporate identity and website helps with branding.
I like uncomplicated websites, with a simple layout and easy navigation. A nice, simple layout, with good graphics, balanced look and good color combinations is my #1 goal when designing a small business web site. Remember to use graphics sparingly and to optimize them for your website because internet surfers are impatient. If your page loads too slowly, theyíll leave.
Navigation should be easy to find and to use, and it should be consistent from page to page. Iíve left more than one site frustrated because I couldnít easily find their navigation.
Small business web sites arenít static. They evolve. You need to start somewhere, and starting with an introductory web site is probably easiest. All you really need to start is five pages. You can always add pages later. The important thing is to just do itótake the plunge and get it out there.
Your five pages could include an index, or home page, about us, services, contact and a sitemap. The index page is your landing page. Typically its design is a little more detailed than the others, but it doesnít have to be that way.
I like to use CSS (cascading style sheets) for designing because itís simply easier to build a web site and to edit its layout with CSS rather than just HTML (hypertext markup language) alone. A change on a CSS sheet changes all the pages on your site at once.
Content is king
Once your site is designed, youíll want to start thinking about content. Design is very important, but it does little good to have a beautiful site without high-quality content.
Your small business home page introduces you and your companyówho you are and what you do. The about us page is usually used to give more detail than the home page about who you are, and your services page gives more detail about what you do. You might wonder why youíd ìwasteî a page on a sitemap since you only have 5 pages, but sitemaps help search engines find all the pages in your site.
As far as content goes, more is better, up to a point. Your pages should be content rich and informative, but they also need to be relevant to your small business. If your visitor canít figure out what your web site is about in just a few seconds, they may leave.
The internet was at first strictly informational, and thatís how it remains today. Several times people have tried experiments using copywriting similar to direct mail sales letters, but theyíve all failed. It seems as if people surf the internet more for information than anything else. Knowing this will help you write pages people will want to read.
Attracting visitors
You could follow your instinct and just start writing, but wait. Thereís research you must do first, or your web site simply wonít be high enough in searches to be found. Search engine optimization is far too big a subject to cover in this short article, but among other things, search engines find your pages based on keywords.
So, pretend for a moment that youíre on the other side of the desk. If you were a customer of your own business, what words or phrases would you use to search for your product or service? Ask friends and neighbors how theyíd search for your product or services.
When youíve come up with a few, check them out on a keyword suggestions tool. You can also use that tool to suggest similar words and phrases. Then find out how many results there would be if you searched for that term. What you want to do next is narrow down your choices to the words or phrases that are searched for the most, but have the fewest results.
Remember that people generally donít look beyond the first three pages for any search term, so if youíre not in the top three pages, your business is not likely to be found at all. If there are millions of results for your phrase, you might simply need to make it more specific.
For example, letís say you have a small business consulting company that specializes in communication for small business. Using ìcommunicationî as a search term is nearly pointless because there are almost 2 billion results for that word. But, there are only 974 results for ìsmall business communicationî.
Much better, but how often is that searched for? According to WordTracker, itís searched for 10 times a day. Not bad, but I think we can do better. How about ìsmall business consultingî? Thatís searched for 261 times a day, and there are 373,000 results. That could be the best primary phrase for a small business communication consulting company.
What you want to do, is write your content around those words and phrases. You donít want or need very manyóthree or four are plenty.
Getting them to come back again and again
Getting visitors to come back to your site again and again is relatively simple. Keep your content fresh and lively, make sure itís informative, and add to it often.
I hope you decide your small business needs a web site. Itís the best way I know how to reach a wider target audience with a relatively small investment.
More info’s and free registrations (restricted to pros), please join our live seminar
Guidelines for Online Small Business Owners.
you are contemplating setting up a small online business you should realise it is simply to down to a numbers game.
The difference between businesses that succeeded and ones that do not is down to their conversion ratios, meaning the ratio of visitors who actually become paying customers.
If one in 50 of your visitors become a paying customer, then you will have a conversion ration of 2%. All businesses should aim to increase this ratio, simple things like using enticing tactics such as a sale can help.
The trouble is nowadays people seem desperate for visitors, they panic and pay for batches of visitors. Unfortunately these systems rarely increase your conversation ratio at all; in fact all they do is give you a false perception of your business.
A lot of online small business owners make 3 mistakes:
1. They put Google Adsense/affiliates everywhere, in my opinion these are good systems but they do detract from your core business.
2. They make their websites too complicated, when marketing to a worldwide audience; keep your website simple and easy to follow.
3. They get greedy, their prices are too high.
These points may seem obvious but it is often the most obvious things that people miss.
Here are some general guidelines for small business owners.
1. Spend time researching your website development.
2. Have an understanding of ëKeywordsí and how they benefit your site.
3. List with the main search engines and directories.
4. Have patience, especially in the first year.
5. Be imaginative
6. Donít be greedy, donít scare potential customers away.
Remember do not get carried away by the amount of visitors to your site, simply work on improving your conversation ratio, by doing this year on year you will be well on your way to running a successful business.
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Advertise, no matter if you are big or small
What is your attitude as a small town businessman when it comes to advertising or taking help of an advertising design agency to provide creative design solutions? I bet, more often than not it is on the lines of “What ever is left over, we’ll use for advertising”. Well, you are not alone. Most of the small town businessmen treat advertising as such, as they feel that they know most of their customers who will come back, advertising or not.
Fair enough, but what if you have a competitor within the town or even without in the form of E-commerce ensuring doorstep delivery and definitely much larger choice. You getting the point?
Competition or not, you always need to remind your customers that you are there and what value you bring to them. This way you not only ensure that loyal customers remain so, but you net new customers. Remember marketing and advertising is an investment, not an expense. Without enough money put aside for advertising your sales can go down and you suddenly have less and less for promotion. You advertise most when you need business. You advertise more when you don’t.
A small-budget advertiser doesn’t have the ”deep pockets” to develop big advertising campaigns or go for top shot advertising design agency. In this case you need to break the rules to be noticed. Avis did it by admitting they were “Number 2” in the car rental business and that campaign took them from 6th place to second place.
Now you must be wondering is there any sure shot way of advertising which not only is cost effective but has maximum impact. To be sure, there isnít any readymade formula for bullís eye hitting creative design solutions but this article proffers some tips to get this sort of marketing in place. Before we get to the tips let’s look at the basic strategies of successful advertising.
* In order to be successful, your advertising must provide a consumer benefit or solve a problem.
* That benefit or solution must be wanted by the consumer.
* The product or service you are offering must be tied directly to that benefit or solution.
* The benefit or solution must be distinctly communicated through medial advertising. In other words, be clear, forget the advertising glitz and make sure the message isn’t lost in the ad.
Average cost of advertising is usually 1 to 5% of gross sales, which can vary according to location, local advertising rates, and industry. Budget conscious advertisers must achieve top results for their advertising dollar. Expand your dollars by adopting some creative techniques.
<b>Some Tips</b>
* Place your ads in off hours or in unusual locations on discounted rates. This will help you in containing the cost. Many times you can still reach your target market with these spots.
* Instead of a one-time big splash ad, be consistent with frequent small ads that work to keep reminding your customers of your presence.
* Consider advertising in regional issues of national magazines. The costs are lower and you can reach your target market. TV Guide is also a good choice. It stays around for at least a week.
* Sponsor a community event if you can like a fun-run, golf tournament, or other event that will be well publicized in the community. Your name may not be prominently displayed but sometimes the positive exposure in the community will bring in new customers.
* Exploit the media you choose to the fullest. If your message is verbal, you don’t need TV. Use radio, billboards and newspapers to the fullest.
* Consider direct mail. A letter and brochure before customer contact can increase business.
*Hire an advertising design agency which might not be top of the heap, but can get creative and specializes in interactive campaigns to provide you with creative design solutions.
I hope these tips will help your business grow. Not all may be relevant to your particular situation. Hopefully, they will illustrate the importance to plan and control your advertising budget.
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Entrepreneurial Myths: The Truth Behind Them
If you are about to start off in business you will have no doubt heard these comments:
ìSo many businesses fail. Why are you doing this?î
ìI hear that you need a large amount of money to get a business off the ground these days.î
ìWhy are you throwing away the security of your job?î
These, and more of the same, are typical of the barriers that so called friends and advisors, put in your way if you are thinking of starting a business. These barriers are built on the back of myths about the pitfalls and challenges which surround running your own business.
In this article, we’ll take a look at some of these myths and reveal them to be exactly that just myths! Don’t get me wrong, being an entrepreneur can be tough and there are hurdles to cross, but let’s bring some common sense into the debate!
<b>You Don’t Have a Personal Life</b>
Yes you will! It can be hard juggling the responsibilities of running your own business and spending time with the family, but at the end of the day, you are going to have far more flexibility with your personal life, than any employee will ever have. The real issue is, do you have the time management and planning skills to get things done, thereby allowing you time to spend with your family.
<b>You Have To Be Cunning and Ruthless To Be a Successful Entrepreneur</b>
Ok, it may help you in the short term but this is not a sound, long term strategy. To be a successful entrepreneur you need to build relationships with both customers and suppliers who will stick by you during the rough times. Being ruthless over pricing may get you one or two good deals but you are unlikely to build a lasting and profitable relationship. Your aim should be to strike a balance between what you want and what your customer or supplier wants.
<b>You Won’t Have To Work As Hard</b>
Your current job may be stressful and subject you to long hours. The idea of running your own business is appealing because you can slow down and take life at your own pace. To a degree this is true but there’s no getting away from the fact that it will be hard work. Most small businesses don’t achieve profitability until year 3 and so it’s a long slog. Remember, if was easy, everyone would be doing it!
What does make the difference though, is that you are finally doing something you love and so the hours and the struggles don’t seem like hard work at all. So perhaps this myth may be true after all!
<b>You Have To Have an Original Idea</b>
No you don’t. Most businesses are built around a central idea. The difference is usually how it’s delivered. The core products of all fast food places are the same, as are clothes shops, newsagents etc. You can make a decent living effectively copying someone else’s idea but done in a slightly different way. Don’t be put off by the doomsayers who will gleefully point out that ìit’s been done beforeî. Your response should be, ëGreat! That shows the idea works!î
<b>You Will Be Your Own Boss</b>
No way! There’s only one boss in your new business the customer. They are essential to your success. When you were working for that large, faceless Corporation, the loss of the odd client wasn’t that big a deal – plenty more where they came from.
In your new world you have to do whatever it takes to keep your customers and keep them happy. The customer is the one who calls the tunes. You have to listen and take note, before someone else does. However, at the end of the day, when all their demands are met, then perhaps you can have some time to yourself and enjoy the pleasures of being your own boss after all!
<b>You Need A lot Of Money To Get a Business Off The Ground</b>
Some businesses do need a fair bit of cash to get moving but there are many areas you can go into without the need to invest in a large amount of stock, machinery or equipment. The low-capital businesses involve the use of three very cheap commodities – your brain power, your knowledge and your time.
A business where you sell your expertise, not actual goods, to other people can be cheaply set up and carry high profit margins. All you may need is a PC, a desk and a telephone line. What’s stopping you?
<b>You Only Have To Do What You Want To Do</b>
Unfortunately this myth is wrong. We all have areas or skills in which we excel and it’s this expertise which usually forms the basis of your business. Your dedication to paperwork, bank statements and the VAT man may not be that high, but branching out on your own doesn’t mean you have the choice to avoid these terrible tasks.
Whilst you were able to do this when you were sitting in the big corporate office, you can no longer hide. These tasks have to be done otherwise the deck of cards can start to collapse.
If you do have serious misgivings on certain areas, marketing for example, then consider taking a course to improve your skills. If it’s something you seriously can’t do, then go and find someone to do it for you – don’t hope it will go away because it won’t.
You will have seen that some of the myths not being true is good news and others not so good news! Be sensible in considering the myths which are thrown at you. See it for what they are – comments from people who don’t know what they are talking about! In the next issue I’ll have some more myth-busting ideas for you.
More info’s and free registrations (restricted to pros), please join our live seminar
Business Tools to Help You Run a Successful Business
Setting up a small business, whether web based or not, can be a very time consuming and difficult task. The increasing popularity of the Internet and the resources available has seen a massive increase in business tools to help you on your way.
When setting up a business, even the best prepared among us will struggle to do everything and remember everything. It is very unlikely that we will understand all of the financial and legal ramifications of a new business, especially when we need to concentrate on getting that elusive first sale or completing the first contract. It isn’t always feasible to employ an accountant and a solicitor as well as a secretary, a salesperson and any other workers needed in the daily running of the business. So, we need to be able to diversify when setting up a new business and the best piece of advice anyone can give you to help is to make the most of the widely available business tools on the market.
Financial Documents and Tools
An accountant is a very expensive commodity that many new businesses can afford full-time. It is down to us to undertake as much of the financial side of things as possible; a daunting task indeed. There is help at hand in the form of business tools.
Spreadsheets have become immensely powerful and can do much of the financial work that any business needs, even invoicing. The Internet is awash with free standard documents for almost any occasions; if you aren’t proficient at doing this yourself, you can find balance sheets, daily cash sheets and almost anything you could need.
The Legal Minefield
Mention legal documents to a new business owner and most will curse you. Again, paying for a lawyer to create all your contracts and other legal documents is a cost that new businesses may not be able to afford. Look at other contracts, get ideas off the internet and take a look at the standard contract and terms and conditions guidelines and when you’re ready, book a session with an affordable attorney and let them look over everything. This way you will only pay once and get all the information you need for an affordable price.
It is important that you get any legal documents checked at least once. A poorly written contract can cost you a lot more than the lawyer’s fees.
Human Resources
Human Resources, or personnel as it was once known, will become very important when you start to employ staff. There are a lot of rules and regulations to abide by as well as a lot of extra information to store that is both important and
confidential.
You can get time and attendance software, standard contracts, standard terms and conditions and software to look after your payroll details.
These are just a few tools available to new business owners. To do a job right requires the right tools. It is better to spend time researching your options first to find the right tools, than to get yourself into a real bind attempting to do the job with the wrong (or no) tools. You will find that the time it takes to get the right tools will pay off time and time again.
More info’s and free registrations (restricted to pros), please join our live seminar
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